Africa is home to the world’s smallest cryptocurrency economies, but is also one of the fastest-growing regions for crypto adoption. Because cryptocurrencies promise a swift, convenient, and efficient means of investment, cross-border payments, and remittances, they attract many adopters in the continent.
That draw is also proving lucrative ground for scams. Over the past few years, many cryptocurrency swindles have been reported in different African countries, leading to millions of dollars in losses for investors who were originally promised high returns. Last year, the global value of illicit cryptocurrency activity, including scams, was $10 billion, according to Chainalysis, a platform that provides blockchain data.
As cryptocurrency adoption gains steam on the continent, it will be important for potential investors—and ultimately, regulators—to learn from the scams that have come before.
How cryptocurrency scams work
The anonymous, unregulated nature of cryptocurrency—often among its selling points—is also what makes crypto popular with scammers. It helps that investor education on digital currencies is minimal.
The specifics vary, but most of these scams fit familiar tropes: pyramid schemes, Ponzi schemes, and exit scams that capitalize on the “get rich quick” potential of cryptocurrencies. Others present themselves as cryptocurrency membership networks providing high returns: Customers hand over money to be “invested” in cryptocurrencies, and then the…